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Jeff Kagan: Sprint Turnaround Has Begun

The Sprint Corp ($S) turnaround looks like it has begun. Sprint surprised the marketplace last week and exceeded expectations with their quarterly report. So what does the future look like for Sprint and the larger wireless industry?

Customers, workers, partners and investors look at companies to see whether they are rising, cresting or falling on the growth wave. Sprint has taken a beating over the last decade. However, they are now starting to show signs of life and growth again.

Sprint and T-Mobile ($TMUS) both fell off the growth track a decade ago for different reasons. Now they are both starting to recover. T-Mobile started their climb roughly three years ago when they hired new CEO John Legere. They had been crashing and burning for years before that point.

Legere took them on an unconventional ride, which attacked the status quo and attracted attention to himself and to T-Mobile. Over the last couple years, they have actually been showing growth. Sprint started their recovery a few years later. During the last couple years, Sprint has gone through a dramatic transformation. In fact, that transformation still continues today.

Today Sprint is a Different Company

Today, Sprint is under ownership and direction from Masayoshi Son in Japan and Marcelo Claure, CEO here in the States. They both continue to reshape the company from the inside out with continued management changes and new marketing ideas that are connecting with the marketplace.

That said, the Sprint transformation is taking longer. It’s hard to look at a particular point in time as the moment of transition for Sprint. T-Mobile’s moment of transition was when they hired their new CEO. However, Sprint’s moment of transition is not a moment. It’s a longer-term transition period over several years.

Because of that, Sprint’s recovery is taking longer than expected, however it looks like it has finally begun. Their latest earnings report shows the first signs of strong improvement. Sprint seems to finally be turning the corner.

Google and Sprint

Consider Google Inc. ($GOOG) as one example of Sprint's progress. Google has faith in Sprint. They have partnered with both Sprint and T-Mobile as their carriers for their MVNO wireless offering.

Like you, I would imagine Google could partner with any carrier they choose. That means Google is risking their own name and reputation for quality and reliability with their own customers in this new area of growth, based on their confidence in the Sprint network and performance. That is a strong feather in Sprints cap.

Turnarounds are a Long-Term Process

The quality and reliability problems that have haunted Sprint in the past seem to be clearing themselves up. After several years of investing in, and reinventing their network, today Sprint is much better and much stronger. Customer complaints seem to have dropped significantly as well.

Is Sprint perfect? No…but no carrier is. Every carrier has issues, and a percentage of customers will always complain. However, at this point I would say Sprint quality and reliability is better and stronger than they have been in many years - and getting better all the time.

Different Path to Success for Sprint and T-Mobile

Turnarounds take time. They are a long-term process. Talking about turnarounds is a much shorter-term process, and is on a completely different track.

T-Mobile started talking up a storm before they had improved their networks. They got on the radar by challenging the existing wireless industry model and leaders. In the beginning, it was more about talk than reality.

However, they then spent time and money over the next few years improving and modernizing their network. They still have a lot of work to do, but they are making good progress and winning customers.

This is the same path Sprint is now on. The difference is they are just beginning their journey, and they are not being boisterous about it. However, they are improving their quality and reliability. Looking at their earnings report, as a result they are growing once again. It seems they are not losing customers any longer, and that’s the best news we have heard from this company in a while.

Turning a ship around has several compnents. First, you slow the loss. Then you end the loss. Then you start to grow. Then you grow more rapidly. Each step takes time. Sprint has been moving from step to step over the last couple years.

The next step is growth, then strong growth, and so far it looks like Sprint is entering that next chapter in their story.

Conclusion

Today both AT&T, Inc. ($T) Mobility and Verizon Wireless ($VZ) are virtually tied for first place. The same thing is happening with Sprint and T-Mobile being virtually tied for third place.

I hope things will continue in this good direction. If so, we will end up with four very strong national competitors in the wireless space. They will all compete and win different slices of the pie. And so far, that is exactly what seems to be happening.

Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at jeff@jeffKAGAN.com.

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